Is the US dollar fund making a comeback?

The US dollar funds have finally witnessed a new development in 2025.

Although the influence of US dollar funds has been gradually overshadowed by the booming RMB funds, their developments still draw wide attention. Recently, an important piece of news from foreign media reported that several institutions, including Lightspeed China Partners, L Catterton, Black Ant Capital, and Yingze Capital, are conducting a new round of fundraising for US dollar funds. It is reported that the total planned fundraising for this round exceeds $2 billion. If this figure is accurate, it will mark the largest-scale return of US dollar funds in recent years.

I verified this news with the relevant institutions. Most of them declined to comment and stated that "the official announcements should be referred to."

The primary market holds a positive view on this round of fundraising, believing that it has broken the sluggish situation since 2022 and is regarded as an important signal for global capital to re-evaluate the Chinese market.

Amid this resurgence, the impact is spreading across various sectors. A headhunter said that not long ago, she received a commission: a Global Fund is urgently recruiting IR personnel for its US dollar funds. The positions are not for resource brokers but for the executive-level IR. Additionally, she has noticed that leading enterprises in the industry are also raising US dollar funds. She told me that "there are signs of a revival in US dollar funds."

"There is indeed a resurgence in US dollar funds," according to the perception of three other US dollar funds. This long-awaited "feeling" comes after more than three years of sluggishness for US dollar funds (mainly referring to US LPs). Now, after being dormant for three years, are these funds about to make a comeback?

The Hidden Fundraising Wave of US Dollar Funds

Along with the market news, the specific fundraising amounts of each institution have also been reported. However, the informed source told me that these reported amounts are only interim figures and may not be finalized. It is possible that the final fundraising could either exceed the target or fall short. The specific situation still needs further observation.

It is reported that in addition to the institutions on the list, Source Code Capital and Shunwei Capital may also be exploring US dollar fund fundraising. However, Source Code Capital clarified to me that there is no new fundraising, and it was old news from last year. Shunwei Capital replied that there is currently no relevant information.

This wave of fundraising for US dollar funds has been extremely low-key. Key information such as the specific closing time and the composition of LPs has not been made public, and the institutions have remained silent.

However, the informed source also said that currently, US LPs still account for a relatively small proportion in the LP composition, and the sources of LPs will become more diversified. In addition to the Middle Eastern sovereign funds, Southeast Asian capital, and family offices that have filled the gap left by US LPs, LPs from Europe and even Africa are also potential sources.

The choice of investment sectors also reveals the cautious nature of US dollar funds.

Although most US dollar funds still regard semiconductors and AI as off-limits, AI+, robotics, and pharmaceuticals will be the important directions for this round of fundraising.

The breakthroughs made by China in the field of hard technology (such as large models and robotics) have made international investors worried about "missing the next DeepSeek or Wang Xingxing," which has become a consensus in the current market.

After several years of valuation adjustments, innovative drugs have become affordable and of good quality, which is also one of the consensuses. However, there are still some non-consensuses in the pharmaceutical sector, mainly due to the booming BD business in recent years.

"I have received many messages from US LPs expressing their intention to invest in domestic pharmaceutical GPs. However, different from the previous equity financing model, US LPs have put forward new market demands for Chinese pharmaceutical GPs. They hope that domestic US dollar GPs will establish a special fund for purchasing pipelines," Fang Yi, a pharmaceutical GP who has close contact with US LPs, told me.

"Most domestic GPs still rely on promoting their ability to judge pharmaceutical companies rather than participating in the international BD operations of pharmaceutical companies to provide higher IRR and DPI for the funds. This is the direction that international LPs hope Chinese GPs will strive towards," Fang Yi believes. Overseas licensing has become the core business model of Chinese pharmaceutical companies, and Chinese pharmaceutical companies should enter the international supply chain for pipeline development and trading.

This is how overseas capital operates. In 2024, Bain Capital invested in the biotech company Aiolos Bio. Only three months later, the company was acquired by GSK for $1.4 billion, bringing a 5 - 8 times return to Bain Capital. In July 2025, Bain Capital and Bristol Myers Squibb (BMS) jointly established an independent biopharmaceutical company, NewCo, focusing on the field of autoimmune diseases.

"About a year and a half ago, international LPs approached Chinese US dollar funds to inquire if they could operate like Bain Capital. However, so far, no domestic GP is fully prepared," Fang Yi said. Most domestic GPs and founders still prefer the traditional IPO path as before.

Is the US Dollar Fund Really Making a Comeback?

So, what is the real situation of US dollar funds?

Judging from the overall fundraising situation in the first half of 2025, US dollar funds are still struggling in the cold winter.

According to CVSource data, the total fundraising scale of the Chinese equity investment market exceeded 1.0665 trillion yuan, a decrease of 32% year - on - year but a 20% increase quarter - on - quarter, showing signs of stabilizing after hitting the bottom. This is mainly due to the accelerated entry of "ballast stone" funds such as the third phase of the National Integrated Circuit Industry Investment Fund and bank AIC funds, along with the simultaneous efforts of state - owned capital, government - guided funds, and insurance funds. However, the new fundraising scale of foreign currency funds has continued to slow down. In terms of investment strategies, more funds are targeting artificial intelligence and advanced technology, but the completed fundraising scale has significantly shrunk compared to the same period last year. The actions of the leading US dollar fund institutions mentioned above are regarded as a precursor to breaking the ice.

Many people believe that the successful fundraising in this round indicates a clear future for US dollar funds and a sign of an improved market environment.

However, the informed source believes that "this interpretation is too superficial."

This attitude is similar to that of another US dollar fund I contacted outside the report. "The situation is not as good as the outside world thinks." Currently, this fund is closing its second - phase US dollar fund.

Mu Yi, the founder of a well - known dual - currency fund, believes that the recent fundraising by US dollar funds is just a trial. "Now that the tariffs are basically stable and the situation has become a bit more stable. People were still very cautious some time ago."

In Mu Yi's view, the more fundamental reason is that globally, there are few good investment targets that can provide LPs with both stable and high returns. "There are no opportunities in Europe and Japan, South Korea and Southeast Asia are too small, and there are few opportunities in Africa and the Middle East. After a comprehensive review, China remains the only country with political and economic stability. Therefore, some US dollar funds will come to China for investment. Since the essence of capital is to make money, in the past ten - plus years of the golden age of Chinese venture capital, the Chinese market has been the most profitable market for investors outside the US, without exception."

Regarding the view of whether US dollar funds can return to the mainstream, Mu Yi believes that "definitely not, but in a few years, their influence and scale should be greater than today." Mu Yi's long - term optimistic view is based on the general trend. Going global has become an inevitable trend for Chinese enterprises in the future. As Chinese companies' overseas expansion shifts from the consumer sector to the technology sector, US dollar funds should still be involved, and even play a greater role.

The golden expansion period of US dollar funds in China was from 2000 to 2015. The fundamental reason was institutional arbitrage: the VIE structure solved the problem of foreign investment access restrictions. US dollar funds invested in Internet giants such as Alibaba and Tencent through this structure, enjoying the demographic dividend and the high - valuation exit dividend of the Nasdaq. US dollar funds are good at monopolizing investment sectors. Before 2015, US dollar funds dominated 90% of China's technology investment, while RMB funds mainly focused on pre - IPO projects.

The period of decline and transformation was from 2015 to 2023. There were two triggering factors. One was the conflict between the dual - track systems: the opening of the Growth Enterprise Market led to the rise of RMB funds, and the valuation advantage of the A - share market attracted Chinese concept stocks to return, resulting in a halving of the share of US dollar funds. The other was the impact of the external environment, which caused the fundraising amount of US dollar funds to plummet from $17.2 billion in 2021 to $1.3 billion in 2024.

According to the situation and market changes, the survival rules for US dollar funds mainly include three aspects: seeking diversified US dollar LPs outside the US, changing the exit path, and adjusting the investment strategy.

Now, all of the above rules have been implemented. The LP structure has changed: Middle Eastern funds and Singaporean family offices have become the new main forces, but the overall scale still cannot fill the gap left by US capital. In terms of the exit path, data shows that in 2025, the proportion of mergers and acquisitions as an exit method has exceeded that of IPOs for the first time. Funds relying on the VIE structure for arbitrage have gradually been phased out, and the surviving funds all have in - depth industrial capabilities. In terms of investment strategies, US dollar funds have shifted from the "burn - and - expand" model in the Internet era to in - depth empowerment. For example, Sequoia China has helped CATL expand into Mexico, and Cathay Capital has guided consumer brands into European channels.

A US dollar fund IR once shared an interesting observation with me. He said that with the changing industry landscape, the words he uses when drafting fundraising documents have completely changed. In the Internet era, the most frequently used words were "burn - and - expand strategy" and "unicorn." Now, more frequently mentioned words are "patent licensing agreements," "tariff avoidance solutions," and "cross - cultural distribution networks."

In summary, the resurgence of US dollar funds is more like a structural rebirth. This round of US dollar funds will focus on structural opportunities in "non - sensitive" sectors and set sail. The narrative context for the Chinese market has also changed to "Chinese innovation, global market."

(Fang Yi and Mu Yi in this article are pen names)

This article is from the WeChat official account "Dongsi Shitiao Capital" (ID: DsstCapital). The author is Li Man. It is published by 36Kr with permission.